Evaluating advertising effectiveness

Good planning and control of advertising depend on measure of advertising effectiveness. Yet the amount of fundamental research on effectiveness is appallingly small. According to jay forrester,probably no more than 1/5 of 1% of total advertising expenditure is used to achieve an enduring understanding of how to spend the other 99.8%. Most measurement of advertising effectiveness deals with specific ads and campaigns. Most of the money is spent by agencies on pretesting ads, and much less is spent on evaluating their effectiveness. A proposed campaign should be tested in one or a few cities first and its impact evaluated before rolling it out nationally. Most advertisers try to measure the communication effect of an ad- that is, its potential effect on awareness, knowledge, or preference. They would also like to measure the ads effect. COMMUNICATION-EFFECT RESEARCH It seeks to determine whether an ad is communicating effectively. Called copy testing, it can be done before an ad is put into media and after it is printed or broadcast. There are three major methods of advertising pretesting. The consumer feedback method asks consumers for their reaction to a proposed ad. They respond to such question as these: 1. What is the main message you get from this ad? 2. What do you think they want you to know, believe, or do? 3. How likely is it that this ad will influence you to undertake the implied action? 4. What works well in the ad and what works poorly? 5. How does the ad make you feel? 6. Where is the best place to reach you with this message? Where would you be the most likely to notice it and pay attention to it? Where are you when you make decisions about this action?

What to Test While putting the campaign together, the advertiser must focus on what he/she should test.

Factors that should be tested during the evaluation process:

Testing the Method: as we have previously highlighted there are a variety of methods to advertise online, choosing the appropriate method will have a substantial impact on its success. Therefore, it is important to determine how well the chosen program is working and to measure its performance against a predetermined standard. The testing process should consider the following aspects when choosing which method will be the most effective. a) Advertising Method (ex: SEO, Banner vs. sponsorship) b) Subclass (ex: regular vs. content sponsorship) c) Location (ex: Banner at the top or Sky-Scraper on the side) d) Time (ex: pre or post product release) e) Size (ex: Pop-up (full page) or Banner (small bar at the top of the page)) f) Vehicle Option Source Effect

According to Advertising & Promotion texbook, Vehicle Option Source Effect is the differential impact that the advertising exposure will have on the same audience member if the exposure occurs in one media option rather than another.(p. 454) . For example, how will the same consumer perceive the same ad, if it is viewed in a banner ad vs. a pop-up ad. Some of the advertising methods have predetermined emotions associated with them (ex. pop-ups are perceived to be annoying), thus the advertiser must consider the emotional impact of the chosen method when making their decision. Thus, the advertiser must consider all aspects and options of possible methods before coming with a conclusion as to which method will be the most appropriate.

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Testing the Content: When an advertiser is developing a new ad or evaluating a current one, he/she must always start with an intensive analysis of the objective of the ad: its intended meaning, its desired effect on the consumers, the demographic of these consumers and its desired effect on brand image. Once these factors have been outlined they will serve as the standards by which the content of the ad will be evaluated. For example, if the intended objective of an ad is to get consumers to try a new product that is being launched, the marketers might test the following: a) If the ad is effective at getting the consumers attention b) If the ad is informative enough to allow the consumers to evaluate the product c) If the ad is persuasive enough to convince the consumers to try the product d) If the ad is memorable as to ensure the consumers will remember to make the purchase e) If the ad is appealing to its intended target market f) If the ad has the desired effect on the brand image (ex: if the ad is consistent with the companys other marketing efforts) Key Points: As we just saw, choosing the most appropriate ad requires more than just choosing the most attractive one, the most appropriate ad must be able to meet all objectives set out by the company, communicate the correct message, be appealing to the target audience and be consistent with the companies other marketing efforts.

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Testing the Budget Decisions: Finally, the advertisers often try to examine effects of their budget decisions on the ads effectiveness. Some of the common questions asked here are: a) Is the budget allocated to this ad campaign appropriate for its size? b) Will a larger budget increase sales? c) Is the allocated budget greater than the anticipated sales? d) Should more money be spent in enhancing the current campaign?

It is important to note that using sales as the predominant evaluation criteria is not always the most effective way of measuring the success of an ad campaign as other factors (Product, Price, Place) strongly influence the effectiveness of the chosen promotion method. A more effective measurement method should include the predefined objectives set out for the ad campaign not just its effect on sales.

Places for testing advertising effectiveness: 1. Laboratory Testing: In a lab testing environment, participants from the target market are brought in to be asked questions about the ad or to evaluate their reaction towards it. These questions and reaction measures will be used to evaluate the ad based on the predetermined criteria mentioned earlier. . The major advantage of using this type of testing environment is the control it providers for the researchers. In this environment, researchers can easily manipulate each aspect of the ad (colour, size, format, etc.) to be able to examine the effectiveness/contribution of each of these characteristics. After examining the effectiveness of each of these aspects, the advertiser can choose ones which will be the most effective for the ad. . The major disadvantage of using this type of testing environment is the lack of realism. According to the advertising and promotion book, when people are brought into a lab (even if has been designed to look like a living room) they may scrutinize the ads much more than they would at home (p. 456). Regardless of the lab layout, informing the participants that they will evaluate a particular car may lead them to feel that they are professional judges for the ad. This may result in the participants over analyzing the ad and leading to a variety of testing biases. Regardless of what happens in the lab, the purpose of the evaluation process is to predict the target markets reaction to the ad in its natural environment (at home, in the office) and duplicating these environments may be impossible in a lab setting. Often, it is felt that the benefits of lab testing outweigh the drawbacks, and lab testing should be strongly considered in the evaluation process.

2. Field Testing: As mentioned earlier, the major drawback of lab testing is the lack of realism, and field testing bypasses this drawback by testing the ad in the environment it will be viewed in including all the competition, distraction and comfort associated with that environment. For example, in a field test, researchers might go out to the participants homes or offices and observe their reaction to the ad. . The major disadvantage of field testing is the lack of control. Using this method may not give the researchers enough information as to be able to specifically link the causes of the participants evaluation to particular aspects of the ad. In other words, the participants may evaluate the ad based on factors outside the attributes of the ad itself (their mood, feelings towards the company, feelings about the competition, etc.). As a result, field testing may provide biased results as it does not provide the researchers with the control as to be able to isolate external factors from the participants true feelings about the ad. Overall, the researchers must ultimately evaluate the trade-off between control and realism when making a decision as to which evaluation method will best meet their needs. . Furthermore, the allocated budget for the evaluation process may play a significant role in determining which method will be used. If the marketer allocates a large budget, he may choose to use both methods as to gain from the benefits of each one. However if the allocated budget is very restrictive, the researchers may opt to use the lab testing method as it is associated with lower costs. Field testing often requires a larger investment of time and money, since it costs more for the researcher to go out on the field and meet with the participants individually rather than evaluating everyone at the same time.

3. Portfolio Testing: ask consumer to view or listen to a portfolio of advertising, taking as much time as they need. Consumers are then asked to recall all the ads and their content, aided or unaided by the interviewer. Recall level indicates an ads ability to stand out and to have its message understood and remembered.

When to test Evaluation of advertising tests may be conducted prior to putting the ad online or after. This section explores different methods of pre-testing and post-testing.

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Pre-testing: actions taken before the campaign is executed. Methods to test consumer's reaction are:

Comprehension and reaction testing: a key concern for the advertiser is whether the ad conveys the meaning intended. Another concern is the consumer's reaction to the ad. Comprehension and reaction tests are designed to assess these responses. Personal interviews, group interviews, and focus groups have all been used for this purpose. While this method offers control and cost effectiveness, there are disadvantages which limit its usefulness:
a)

Consumer may become self-appointed expert-- sometimes, knowing they are being asked to critique ads, participants try to become more expert in their evaluations, paying more attention and being more critical than usual. The result may be an evaluation on elements other than those planned.

b)

Halo effect-- sometimes participants rate an ad good on all characteristics because they like a few and overlook specific weaknesses. This tendency (halo effect) distorts the ratings.

c)

Preferences for specific types of advertising may overshadow objectivity-- ads that involve emotions or pictures may receive higher ratings or rankings that those employing copy, facts, or rational criteria. Even though the latter are often more effective, they may be judges les favorably by participants who prefer emotional appeals.

So how can these problems be solved? Some can be remedied by using ratings scales instead of rankings. Bur ratings are not always valid either. Thus, while consumer juries have been used for years, questions of bias have led researchers to doubt their validity. As a result, a variety of other methods are more commonly displayed.

Physiological Measures: this involves a laboratory setting in which physiological responses are measured. They indicate the receivers involuntary response to the ad and thus, eliminating biases associated with the voluntary measures reviewed to this point. This includes: 1. Pupil dilation- designed to measure dilation and constriction of the pupils of the eyes in response to stimuli. Dilation is associated with action; constriction involves the bodys conservation of energy. Advertisers have used this to evaluate product and package design as well as to test ads. Pupil dilation suggests a stronger interest in an ad or implies arousal or attentiongetting capabilities.

2. Eye tracking- viewers are asked to view an ad while a sensor aims a beam of infrared light at the eye and follows the movement to show the spot on which the viewer is focusing. This shows how long the viewer is focusing on each image and the sequence of viewing. Eye tracking can identify strengths and weakness in an ad. For example, background action may distract the viewers attention away from the brand being advertised. The advertiser can remedy this distraction before fielding the ad.

2. Post-testing: occurs after the ad has been in the field. It is designed to determine if the campaign is accomplishing the objectives required and to serve as input of how well its doing.

Inquiry tests: designed to measure advertising effectiveness on the basis of inquiries generated from ads appearing in various print media. The inquiry may take the form of the number of coupons returned; phone calls generated, or direct inquiries through reader cards. For example, if you called in a response to an ad recently, perhaps you were asked how you found out about the company/product or where you saw the ad. This is a very simple measure of the ads or mediums effectiveness.

More complex methods of measuring effectiveness through inquiries may involve: 1. Running the ad by time or day of the week can help manage reach. For example, Yahoo movies section receives highest audience on the weekends.

2. Running split-run tests: in which variations of the ad appear in different websites, targeting different audience which examines specific elements of the ad or variations on it. For example, company places same ad in different industries and measures the frequency of visitors.

Recall tests: traditional interviews with Web users help determine recall and whether viewers remember the ads they see, as well as whether there is a halo-effect among ads. Scores are based on percentage of respondents who can accurately recall the ad, idea communication, and likelihood of purchase.

However, many researchers find faults in this type of test due to:

False claiming: respondents may claim to have seen an ad when they did not. This may be a result of having seen similar ads elsewhere, expecting that such an ad would appear in the medium, or wanting to please the questioner. Interest in the product category would

increase reporting of ad readership. Whether this false claiming is deliberate or not, it leads to an over-reporting of effectiveness.

Interviewer sensitivities: any time research involves interviewers, theres a potential for bias. Respondents may want to impress the interviewer or fear looking unknowledgeable if they continually claim not to recognize an ad.

The readers degree of involvement with the product: This in addition to the distinctiveness of the appeals and visuals may lead to higher-than-accurate recall scores, although in general the method may lead to lower levels of recall than actually exist.

Advertisers are also interested in post testing the overall communication impact of a completed campaign. If a company hoped to increase brand awareness from 20 percent to 50 percent and succeeded in increasing it to only 30 percent, then the company is not spending enough. Its ads are poor, or some factor has been ignored.

FORMULA FOR MEASURING SALES IMPACT OF ADVERTISING

Share of expenditure

Share of voice

Share of mind and heart

Share of market

SALES-EFFECT RESEARCH What sales are generated by an ad that increases brand awareness by 20 percent and brand preference by 10 percent? Advertisings sales effect is generally harder to measure than its communication effect. Sales are influenced by many factors, such as the products features, prices, and availability, as well as competitors actions. The fewer or more controllable these other factor are, the easier it is to measure effect on sales. The sales impact is easiest to measure in direct-marketing situations and hardest to measure in brand or corporate image- building advertising. Companies are generally interested in finding out whether they are overspending or under spending on advertising. One approach to answering this question is to work with the formulation shown in above fig.

A companys share of advertising expenditure produces a share of voice (i.e. percentage of company advertising of that product to all advertising of that product) that earns a share of consumers minds and hearts and ultimately, a share of market. J.O. peckham studied the relationship between share of voice and share of market for several consumer products over a number of years and found a 1:1 ratio for established products and a 1.5-2.0:1.0 ratio for new products. Researchers try to measure the sales impact through analyzing either historical or experimental data. The historical approach involves correlating past sales to past advertising expenditures using advanced statistical techniques.

Reasons for Measuring Advertising Effectiveness

Previously we mentioned that choosing the right method of online advertising depends on the business GOPST needs. The next section will highlight the reasons that make measuring the chosen methods effectiveness an important aspect of the businesss success.

Reasons why Companies should Measure Advertising Effectiveness:

Avoiding Costly Mistakes: According to emarketer.com, Online advertising spending will reach $16.7 billion in 2006, eMarketer predicts. That's a growth rate of 33.2%, the highest growth year-over-year expected this decade. This means that companies are spending thousands if not millions of dollars each year to advertise online, but that is not to say that it is being spent wisely. The only way to ensure that this money is not being wasted on ineffective advertising programs is to continuously evaluate the effectiveness of the chosen programs and to ensure that these programs are achieving their intended purpose. Evaluating the effectiveness of the chosen programs is not all about money, it also gives the e-marketer the opportunity to analyze the non-tangible effects of the chosen program. For example, if a company chooses to go with a pop-up advertising program, they can evaluate its ROI by comparing its click-throughs to the amount of money invested in building it. However that is not the extend of it; a good evaluation

program will be able to analyze the consumers reaction to that program, its effects on the companys image or its effectiveness in comparison to a banner ad program. Key Points: As the saying goes, "a penny saved is a penny earned." If advertisers think of the cost for efficiency testing as an investment that prevents future costly mistakes they can think of the prevented costs as a penny earned and take full advantage of the benefits of this strategy.
2.

Evaluating Alternative Strategies: Not only is it important to evaluate the effectiveness of the chosen method, but also the opportunity costs of choosing that method. Often after companies have chosen a method, they focus their attention exclusively on that method ignoring the potential profits that would have come about if they went with an ulterior method. A good evaluation program will be able to analyze the effectiveness and the opportunity costs of the chosen method.

3.

3. Increasing the Efficiency of Advertising: often after companies choose a particular method, they become attached to that method and lose sight of the initial goal they were aiming for. Because the marketers know what the intended message of that chosen program is, they expect their customers to know that message as well. A continuous evaluation of the chosen program will ensure that the message the consumers are receiving from this program is aligned with the message the marketer intended to send.

Reasons for NOT Measuring Advertising Effectiveness

1. Cost: the most common reason that companies provide for not measuring their advertising effectiveness is the cost of conducting a measurement program. Often companies believe that the money used for measuring their advertising effectiveness can better spent on creating more advertisements or improving their product. Although this might possibly be true, lets consider the flip side; if the company does not measure the effectiveness of its current advertising program, they will not know if this program reaches their desired audience, sends the desired message or meets its intended goals.

Being able to increase the advertising budget or improve the product will not help the company if the message is sent to the wrong audience or if the message that is comprehended by the consumers is different from the message that the company intended to send. As a result even the slightest evaluation effort can go a long way in ensuring that the desired message is sent to the appropriate audience and hence saving the company thousands if not millions of dollars.

2. Research problems: As we will see in the sections to come, the evaluation process can be very complicated, time intensive and confusing for a company that is trying to start such an effort. In addition, it can very difficult to isolate and evaluate the effects of only one of the companies marketing efforts; as a result managers often can not justify the costs if they cant pin point the contribution of each of their marketing efforts. For example, it might be very difficult to isolate the contribution of the companys banner ad program from their overall marketing effort as a consumer might not necessarily make a purchase based on what they see in banner ads, but consider a variety of factors (brand image, pervious experience with the company, or an on TV) whenmaking a purchase decision. However, although it might be true that we cannot pin point the dollar contribution of one program, research can be used to evaluate the communication, reach and other factors associated with each advertising method.

3. Disagreements on what, when and where to test: There are a variety of methods used when determining what, where and when to measure the effectiveness of an advertising program. Choosing the appropriate measurement method depends largely on the industry the firm is in, the objectives of the program based on GOPST analysis and the person that will be analyzing the results. For example, sales managers may want to measure the contribution of the advertising program on sales, whereas top executives may be interested in the effects of the program on the companys image. These differences often lead to a great deal of confusion between the mangers and might lead them to abandon the evaluation program altogether. However, there is no rational reason for this conflict as we will later see, each of the measurement tools work to achieve a different objective.

ASSIGNMENT ON:

RATIONAL FOR MEASURING ADVERTISING EFFECTIVENESS

SUBMITTED TO: MR. RAJAN SHARMA

SUBMITTED BY: Vikas chauhan ROLL no. 24 6th sem

BIBLOGRAPHY
1. Management marketing- Philip kotler topic: evaluating advertising effectiveness Pg no. 606 2. http://www.scribd.com/doc/45808063/Reasons-for-Measuring-AdvertisingEffectiveness

3. http://www.google.co.in/url?sa=t&rct=j&q=rational+for+measuring+adverisi ng+effectiveness&source=web&cd=1&ved=0CCoQFjAA&url=http%3A%2F %2Fpeople.umass.edu%2Fdebevec%2Fmktg422%2FMeasuring%2520Advert ising%2520Effectiveness%25202.pdf&ei=XClkT6H2GYb5rQe7wcW9Bw&u sg=AFQjCNHBR17zgRVWOnsoRVMd8Mqv9lqnwQ